Bone morphogenetic proteins (BMPs) induce bone formation during development and postnatal bone repair. Demineralized bone matrix (DBM) is the initial osteoinductive material for the isolation and purification of BMPs. Our previous studies have demonstrated that the initial cellular sequence and repair tissues induced by DBM/BMPs are distinctly different in the calvarial bone defects from those induced in the soft tissue sites. DBM-induced repair of rat calvarial defect [unreadable] occurs initially by the differentiation of dura-derived mesenchymal cells to osteoblasts and the direct formation of bone. In contrast, implantation of DBM into subcutaneous sites first induces cartilage cells followed by an endochondral sequence of ossification. The molecular and cellular mechanisms of site-specific differences in repair responses to DBM/BMPs are unknown. More recently, we have discovered that one member of the nuclear factor of activated T cells (NFAT) transcription factors family, NFATp (NFATc2), may be a represser of cartilage cell differentiation in adult mice. In adult mice lacking NFATp, resident cells in the extraarticular connective tissues spontaneously differentiate to cartilage followed by an endochondral sequence of ossification. To our knowledge, NFATp is the first transcription factor described to control the differentiation of adult mesenchymal stem cells into cartilage. This is in contrast to the function of the cartilagespecific transcription factor Sox 9, which is critical in embryonic cartilage morphogenesis. In this application we wish to explore whether transcription factor NFATp regulates the differentiation pathways of adult mesenchymal stem cells during DBM-induced repair of cranial defects in mice. We propose 1) to detect whether NFATp expression is higher at the cranial site of normal mice, which suppresses the chondrogenic pathway at the cranial site, and 2) to determine whether lack of NFATp will alter DBM-induced bone differentiation pathways and the healing process during the repair of cranial defects. Acquiring such understanding may provide novel insight into the mechanisms of site-dependent responses to DBM/BMP implants and could possibly lead to improved therapeutic methods for the repair of skeletal tissues. [unreadable] [unreadable] [unreadable]